Dubai Becomes More Affordable for Travelers

Hyatt’s stand at the Arabian Travel Market trade fair in Dubai this week.

Rory Jones for The Wall Street Journal

Having built a reputation on high-end luxury and opulence, Dubai is getting a makeover with some more affordable, one might even say cheaper, accommodation options.

International hotel chains have wizened up to the need for mid-range hotels in a city that has built a reputation on excess. Chicago-based Hyatt Hotels on Monday brought its Hyatt Place brand to the Middle East, opening the hotel in older area of Dubai called Deira. Hilton Worldwide also opened a Double-Tree Hotel in the city, while Starwood Hotels & Resorts Worldwide, Inc plans to expand its Aloft brand in the United Arab Emirates.

Ron Cusiter, the vice president of sales operations for South West Asia at Hyatt, says Dubai was previously seen as a “posh holiday”, but now the emirate is attracting more and more mid-income travellers from India, Africa and the Middle East. “There’s growing demand in that market,” said Mr. Cusiter.

Announcements of the new hotels are well-timed with the Arabian Travel Market, the biggest hospitality trade fair in the region running this week and gathering thousands in the hospitality industry. Longer term, hoteliers are aiming to meet expected demand for hotel rooms ahead of Dubai hosting the World Expo, a six-month fair that authorities in the emirate hope will attract 25 million visitors in 2020. Crucially, Dubai wants to attract a different type of customer.

Last year, Emaar, the developer behind the Burj Khalifa and the owner of luxury hotels in Dubai, tied up with government-owned developer Meraas Holding to build mid-range hotels called the ‘Dubai Inn’. The partnership said 5-star hotel rooms accounted for the majority of new and current hotel inventory in the city. The supply of serviced apartments is also forecast to increase as developers aim to tap into Gulf families and business executives spending long-periods in Dubai.

JLL estimates that there are 61,150 hotel rooms in Dubai currently, with a total pipeline of 20,000 keys, while Nakheel, the developer behind the man-made island of Palm Jumeirah, has released plots for up to 23,000 rooms to be built on its Deira Islands reclaimed land project. So supply is increasing, but it isn’t expected to hurt occupancy just yet, which is forecast to remain above 80% for the next two years, according to a new report by PwC.

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